Phoenix Center settlement fell through before Pontiac EM's exit

Former Pontiac Emergency Manager Lou Schimmel made a $1 settlement offer in the lawsuit challenging the Phoenix Center demolition a week before his retirement, but balked at terms the Ottawa Towers wanted as part of a deal.

The office buildings sued last year after Schimmel announced demolition plans for the neighboring Phoenix Center.

A 14-point document from the Ottawa Towers provided by Mayor Leon Jukowski makes numerous settlement requests. They include: Nearly $700,000 from the city for repairs, tax breaks, waivers from city building and operating permits, a warranty deed on the Phoenix Center, a consent judgment and an advertisement in The Oakland Press twice a week for four weeks stating "that the Phoenix Center is not going to be demolished and that trespassers will be prosecuted to the fullest extent of the law."

Jukowski said the settlement offer was made because Schimmel "was looking at the long-term costs of continuing the litigation. I think he felt he had to demonstrate to the state he'd pursued all possible avenues."

"They made that offer when Lou Schimmel had one leg and four toes out the door," Sallen said. "For the city to have provided that settlement document to (a newspaper) is highly inappropriate."

Jukowski said the Ottawa Towers have stated an interest in purchasing the Phoenix Center for a dollar.

"This document shows that they're just flat-out lying," he said. "This documents shows they want (more than) $700,000 to take the Phoenix Center. They're asking us to pay them to take city property."

Schimmel said the settlement fell through because "I made an offer to sell it to them for $1, not $1 plus $1 million."

In an Oakland Press article published in June 2012, while the city was taking demolition bids for the Phoenix Center and before a lawsuit was filed by the Ottawa Towers, broker Michael Dudash said the office buildings' ownership had offered to buy the Phoenix Center for $1.

The settlement document asks the city to assess the Phoenix Center at the proposed $1 purchase price.

"What sense would it make for us to add tax burden to the enormous burden we'd already have of bringing the building up to snuff?" Sallen said. "How are we going to afford maintenance? Well, one way is through tax consideration."

Jukowski said the requests for tax abatements on the Phoenix Center -- as well as a proposed $400,000 assessment of the eight-story Ottawa Tower I on Woodward Avenue and a $326,000 assessment of the eight-story Ottawa Tower II on Judson Avenue, both of which have hundreds of thousands of square feet of office space -- are "neither legal nor doable."

The office buildings' ownership wants the city to value the Phoenix Center at $1, "and when (they) turn around and sell it for $1 million, the tax value remains at $1 after (they) sell it."

Ottawa Towers attorney Sallen said: "Other cities offer tax incentives to lure business in. The City of Pontiac figures out ways to chase business away, at least as we're concerned."

The city is willing to sell the structure for $1 "because they can't afford the upkeep and maintenance they haven't done for 10 years," he said.

The building's electrical system was damaged by copper scrappers last year, leaving the Phoenix Center in the dark. The Ottawa Towers have since restored lighting to the garage's south side.

The out-of-court settlement document said the towers have spent $69,758.77 on electrical repairs and anticipate $550,000 in future costs.

Schimmel cited $8.1 million in repairs and upkeep needed on the structure during the next 10 years and an annual loss of $175,000 when he announced his intention to have the garage torn down.

The Ottawa Towers' lawsuit contends a demolition would take away the office buildings' parking, violate their easement rights and damage their structures. The suit asks for $9 million in damages in the event of a demolition.

"Between attorney's fees to fight the city and repairs that had to be made to the Phoenix Center the city wouldn't do that my client did, he's spent more than $1 million in the last year," Sallen said.

The Ottawa Towers settlement document asks that "no permits ever be required for the maintenance and routine repairs required in the parking structure."

It also asks for a demolition permit that's valid for 15 years to be issued by the city for the amphitheater and exterior stairs on the Phoenix Center, plus an "undisputed right to operate the amphitheater without interference from the city and no operating permits will ever be required."

Jukowski said the Ottawa Towers "want no permits in perpetuity on that building." He said a demolition permit that's valid for 15 years "is absolutely insane."

In the document, the Ottawa Towers also ask the city "to remove the bus stop on the (north) side of the Phoenix Center. This is important, as criminals hang around this area."

Jukowski said the city doesn't have the ability to remove a SMART bus station, and "they've adamantly said in court that there's no crime associated with the building."

Sallen declined to comment on every element of the document, and said it was intended as a point of reference during negotiations.

"If they were serious about settling this case, this would have come to us more than five minutes before Lou Schimmel's tenure ended."